American Airlines expects 'normal operations' after filing for bankruptcy
The airline claims the move comes as a bid to 'achieve industry competitiveness' as the reorganization would help the business have a better cost and debt structure.
According to the company's balance sheet for 2010, it had US$16.26 billion in long term debt and negative equity of US$3.95 billion.
American's share price fell by 83.95% yesterday to US$0.26 on the New York Stock Exchange (NYSE).
"American expects to continue normal business operations throughout the reorganization process, and the business will continue to be operated by the Company's management," the company said in an announcement.
"The United States Chapter 11 reorganization process enables a company to maintain normal business operations while it establishes a competitive cost and debt structure. This action has no direct legal impact on any American Airlines operations outside the United States."
Gerard Arpey resigned as CEO of AMR Corporation and has been replaced by Thomas Horton.
"Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges.
"Our Board decided that it was necessary to take this step now to restore the Company's profitability, operating flexibility, and financial strength. We are committed to working as quickly and efficiently as possible to appropriately restructure American so that it can emerge from Chapter 11 well-positioned to assure the Company's long term viability and its ability to compete effectively in the marketplace.
"American serves 260 airports in more than 50 countries and territories, and we are committed to maintaining a strong presence in worldwide markets. I am confident American will emerge even stronger as a global leader known for excellence and innovation, a travel partner customers seek out, and a carrier that serves communities throughout the world," said Horton.